INFRASTRUCTURE spending rose by a meager 1 percent in July, the first month in office of the Duterte administration, as higher disbursements for road projects, school buildings and health facilities were offset by lower defense and regional expenditures, the Department of Budget and Management (DBM) reported Wednesday.
However, an analyst believes that infrastructure spending will gain traction moving forward.
The growth in infrastructure and other capital expenditures of the government was only minimal at 1.0 percent to P38.7 billion in July from P38.3 billion a year earlier.
Although, disbursements of the Department of Public Works and Highways increased by P5.9 billion, these were offset by the lower disbursements in the Department of National Defense (DND) and the Autonomous Region in Muslim Mindanao (ARMM), the DBM noted.
“Capital expenditures of the DND were down for the month due to the one-off payment under the AFP [Armed Forces of the Philippines] modernization program for the FA-50 aircraft acquisition project in July 2015,” the DBM explained.
Projects under the AFP modernization program for the second half are still in various stages of procurement, while some are for evaluation relative to the priorities of the new administration, the budget department added.
In the case of the ARMM, the DBM said implementation of a number of local infrastructure projects are still ongoing after delays in procurement due to the election ban.
“The impact of this, however, was tempered by the increase in other capital expenditures of agencies which include the repair and rehabilitation of school facilities by the DepEd and some capital outlays of the SUCs [state universities and colleges],” it said.
Trinh Nguyen, senior economist for emerging market Asia at Natixis said it takes some time for policy intentions to be realized, referring to the Duterte administration’s promise to ramp up infrastructure spending from 3 percent to 5 percent of the gross domestic product.
“This doesn’t necessarily mean that future spending will be meager. Spending will likely increase in the months ahead,” she said.
Meanwhile, the DBM said the July numbers brought the seven-month tally of infrastructure and other capital spending to rise by 41.8 percent to P267.7 billion from P188.7 billion.
In the coming months, the implementation of major infrastructure projects in Metro Manila and major cities will go on a 24-hour, seven days a week basis.
“The monitoring of these projects will also be strengthened with the effective use of modern technology,” the DBM noted.
The government targets to spend P631.9 billion on infrastructure this year. Next year, it plans to spend more than P890 billion on projects that will be undertaken simultaneously in all regions, including small-, medium- and large-scale ventures.
The P890-billion planned spending on purely infrastructure represents 5.2 percent of next year’s P3.35 trillion national budget, up 41 percent from this year’s target.